Kirkevue Industries Pays Out All Its Earnings as Dividends, Currently

Multiple Choice

Kirkevue Industries pays out all its earnings as dividends, currently expects earnings to be constant and has a share price of $27. In order to expand, Kirkevue announces it will cut its dividend payments from $2.15 to $1.75 per share and reinvest the retained funds. What is the growth rate that should be achieved on the reinvested funds to keep the equity cost of capital unchanged?

A) 1.48%
B) 0.14%
C) 0.17%
D) 0.15%